Billion-dollar power transmission and distribution equipment giant Siyuan Electric ventures into the Hong Kong Stock Exchange: carrying 541 million yuan in book goodwill, fierce competition and bidding models may put pressure on profit margins

According to the Hong Kong Stock Exchange official website, Shenzhen Stock Exchange Main Board listed company Siyuan Electric (SZ002028, share price 218.49 yuan, market capitalization 170.9 billion yuan) submitted its listing application documents to the HKEX on February 11, with CITIC Securities serving as the sole sponsor.

According to the prospectus (draft version), Siyuan Electric plans to use the funds raised from this Hong Kong listing for expanding production capacity, strengthening R&D and testing capabilities, building a global service network and promoting market development activities, advancing overall digital transformation and intelligent upgrades, global strategic investments and acquisitions, as well as working capital and general corporate purposes.

A reporter from Daily Economic News reviewed Siyuan Electric’s prospectus and found that, based on 2024 revenue in China’s transmission and distribution control equipment market, Siyuan Electric ranks eighth among international companies. However, the market competition pattern is relatively concentrated, and the company’s market share is far behind the number one firm. Additionally, as business scale grows, trade receivables and notes receivable amounts, as well as receivables turnover days, increased in 2023, 2024, and the first three quarters of 2025. Furthermore, in 2023 and 2024, Siyuan Electric recorded impairment losses on goodwill exceeding 100 million yuan, and as of the end of the third quarter of 2025, the book value of goodwill was 541 million yuan.

Overseas revenue share continues to rise

Siyuan Electric is a global manufacturer of transmission and distribution equipment and a provider of integrated power energy solutions. The prospectus cites Frost & Sullivan data indicating that, based on 2024 revenue in China’s transmission and distribution control equipment market, Siyuan Electric ranks eighth among international companies, fifth among domestic companies, and third among private domestic companies, with a market share of 3.5%. As of the end of the third quarter of 2025, Siyuan Electric’s business has expanded to over 100 countries and regions worldwide.

However, the prospectus shows that China’s transmission and distribution control equipment market is highly concentrated. In 2024, the top five companies accounted for 61.1% of the market share, and the top ten accounted for 79.2%. Although Siyuan Electric’s 3.5% market share ranks eighth, it is significantly behind the number one company (Company A) with a 32.1% share.

[Image source: Siyuan Electric prospectus]

Siyuan Electric’s business comprises six segments: switchgear, transformers, protection and automation, power electronics, energy storage systems and components, and EPC (engineering, procurement, and construction). By segment, in the reporting period, the main revenue came from the switchgear segment, accounting for 46.8%, 44.7%, and 41.5% of total revenue in 2023, 2024, and the first three quarters of 2025, respectively.

During the reporting period, overseas revenue accounted for 17.3%, 20.2%, and 30.3% of total revenue, respectively. The company has successfully integrated into the supply chain of top European grid operators, establishing long-term stable partnerships with well-known grid operators in Italy and Belgium, and achieving product breakthroughs in the UK, Saudi Arabia, Kuwait, and other countries.

As overseas business proportion increases, the risks faced by Siyuan Electric also grow. The company states: “Compared to operating in our domestic market in China, conducting business internationally—especially in markets and countries where we have limited experience—poses additional risks and challenges.”

Currently, Siyuan Electric has five manufacturing bases in China, two of which are located in Nantong, with the remaining three in Shanghai, Changzhou, and Wuxi.

Raw material costs account for over 80% of total sales costs, with receivables and notes increasing alongside business scale

In terms of performance, during the reporting period, Siyuan Electric achieved revenues of 12.46 billion yuan, 15.458 billion yuan, and 13.827 billion yuan, respectively, with profits of 1.609 billion yuan, 2.085 billion yuan, and 2.271 billion yuan.

[Image source: Siyuan Electric prospectus]

The company’s main clients include large national grid companies, the five major power generation groups and their subsidiaries, local power companies, and clients in industries such as rail transit, petroleum, and industrial mining. During the reporting period, revenue from the top five customers accounted for 51.3%, 50.1%, and 42.4%, respectively, and revenue from the single largest customer accounted for 33.9%, 31.6%, and 28.6%.

Although customer concentration decreased over the period, Siyuan Electric disclosed that it mainly secures projects and orders through bidding. The company also admits that the market is highly competitive, with many competitors of varying strength, leading to uncertainty in winning bids. To improve chances of success, the company may need to adopt price reduction strategies, which could directly compress profit margins. If price cuts exceed cost savings, gross and net profit margins could be affected, damaging overall profitability.

The prospectus also shows that Siyuan Electric relies on a stable supply chain for raw materials and components. Significant fluctuations in raw material prices or supplier delivery delays could cause production delays, increased costs, or inability to fulfill customer orders. During the reporting period, raw material costs (included in sales costs) accounted for 84.1%, 84.1%, and 83.4% of total sales costs, respectively.

The company states: “Any unexpected shortages, delivery delays, or price fluctuations of raw materials and components could lead to supply disruptions, affecting our production schedules.”

As business scale expands, Siyuan Electric’s capital occupation issues become more prominent.

The prospectus shows that during the reporting period, trade receivables and notes receivable were 5.321 billion yuan, 6.604 billion yuan, and 8.085 billion yuan, respectively; receivables turnover days were 126, 129, and 138 days.

The company also disclosed that the “unconfirmed endorsed notes payable” increased from 387 million yuan at the end of 2024 to 514 million yuan at the end of the third quarter of 2025, a 32.8% increase. Additionally, as of the end of January 2026, only 37.8% (10.95 billion yuan) of the contractual liabilities recorded as of the end of Q3 2025 had been recognized as revenue.

As of the end of Q3 2025, the book value of Siyuan Electric’s goodwill reached 541 million yuan

Siyuan Electric’s history dates back to December 1993, originally as Shanghai Siyuan Electric Co., Ltd. The company completed a share reform and changed its name in December 2000, and was listed on the Shenzhen Main Board in August 2004. Regarding the decision to pursue a secondary listing in Hong Kong, Siyuan Electric states it aims “to further advance our globalization strategy, better access international capital markets, and enhance overall competitiveness.”

Wind financial terminal data shows that Siyuan Electric’s A-share IPO raised about 220 million yuan, and in June 2007, it raised approximately 406 million yuan through private placement.

[Image source: Wind]

Additionally, the prospectus shows that in 2023 and 2024, Siyuan Electric recorded goodwill impairments of 113 million yuan and 107 million yuan, mainly due to “uncertainties in the financial performance of the supercapacitor business in 2023 and 2024, and goodwill impairment losses related to the supercapacitor cash-generating units acquired through business combinations.”

As of the end of Q3 2025, the book value of Siyuan Electric’s goodwill was 541 million yuan, mainly from acquisitions of supercapacitor and rectifier businesses. If the acquired businesses underperform, further goodwill impairments may be necessary.

At the time of filing, Chairman Dong Zengping held approximately 131 million A-shares, accounting for about 16.8% of the company’s total issued share capital. Siyuan Electric has no controlling shareholder, but Dong Zengping is considered the largest individual shareholder.

Regarding the 541 million yuan book value of goodwill and the continuous growth of receivables, on the morning of February 12, the reporter made multiple attempts to contact Siyuan Electric by phone, but the company’s lines remained unanswered.

Daily Economic News